The ruling body of the London School of Economics was so concerned about the university's burgeoning links to the Gaddafi regime that in 2009 it quietly forced one of its professors to stand down from a foundation run by the dictator's son.

The revelation raises questions about why – apparently in spite of its concerns over the academic's role – the LSE council was prepared to accept a £1.5m donation from Saif al-Islam Gaddafi two years ago. Last week the row over the donation resulted in the resignation of the council's director, Sir Howard Davies, and the launch of an investigation into links between the LSE and the Libyan regime.

Now it has emerged that David Held, a professor of political science at the LSE and Saif Gaddafi's tutor when he was taking a PhD at the university, was appointed to the Gaddafi International Charity and Development Foundation on 28 June 2009, almost a month before the LSE announced that it would accept the donation.

The foundation's minutes reveal that Held was appointed to its board along with luminaries including Giulio Andreotti, the former prime minister of Italy, Nobel prizewinner Professor Richard J Roberts, and the Rev Dr Chung Hwan Kwak, chairman of the Universal Peace Federation, an offshoot of the Unification Church founded by Sun Myung Moon. But by October Held had been forced to stand down after members of the university's council expressed disquiet.

While ostensibly a charity, the foundation seemed to be chiefly a vehicle for promoting Saif Gaddafi's autocratic views. Its latest minutes are effectively an attack by Gaddafi on press reports suggesting he was engaged in a power struggle with his brothers and lived in an expensive house in London.

Bizarrely, the foundation also released a statement saying it would sue anyone who suggested there had been a reshuffle in the General People's Committee in Libya.

A spokesman for the LSE said Held "was not on the board of the foundation at the time the £1.5m gift was discussed, and accepted, by council on the 23 June 2009. Following the 23 October 2009 council meeting, Professor Held resigned from the board on the advice of council. David Held received no payment for his role."

The LSE has commissioned an independent inquiry into its financial dealings with Libya, including a £2.2m contract to train Libyan officials. The university is also investigating claims that Gaddafi plagiarised parts of his PhD.